The staff members of Evergrande’s wealth management unit have been detained by police in Shenzhen, southern China. The police made a post on social media urging the public to report any suspected cases of fraud. The specific details regarding the number of people detained, their identities, and the charges they could face were not disclosed.
Evergrande, a property developer, has been at the center of a crisis that has engulfed China’s real estate industry since 2021. The company has faced massive debt and losses, resulting in an attempt to restructure its business and defaulting on its debts.
In a separate development, the insurance arm of Evergrande will be taken over by a newly created state-owned insurer. The National Administration of Financial Regulation (NAFR) announced that Haigang Life Insurance Co. Ltd., a state-owned company, will assume the assets and liabilities of Evergrande Life Assurance.
China’s real estate industry is of significant importance to the country’s economy, being one of the key sectors in the world’s second-largest economy. The crisis in the sector has raised concerns among experts that it could destabilize the Chinese economy and have repercussions on global financial markets.
Beijing has also been cracking down on alleged corruption in the financial sector for the past few years, with top executives facing severe punishments, including the death penalty. The government has been implementing measures to make it more difficult for property developers to access credit since 2020.
It remains to be seen how the situation at Evergrande will unfold and what impact it will have on China’s economy and the global financial markets.